Vaccines Are Getting a Booster Shot
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As their profit potential jumps, so
does new investment in R&D
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In the pharmaceutical industry, vaccines have long been poor
stepsisters to big, glamorous drugs. Immunization campaigns have worked
wonders, wiping out scourges such as polio. Yet annual global sales of
vaccines are just $6 billion--about $1 billion less than what
best-selling cholesterol drug Lipitor generates in one year. And the
number of major companies selling vaccines has shrunk from 20 in the
1980s to just 4. For many years, "it wasn't an economic business to be
in," says Dr. Paul Drayson, CEO of PowderJet Pharmaceuticals PLC, a
vaccine maker in Oxford, England.
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No more. In late November, Merck & Co. (MRK
) reported that its experimental vaccine could ward off infection from
cervical cancer-causing human papillomaviruses (HPV). And
GlaxoSmithKline PLC (GSK
) is working on one for herpes. If proven safe and effective in larger
trials, both could become blockbusters, analysts say. And that's just
the start. Company research-and-development pipelines are bulging with
nearly 100 vaccines against infectious agents, with dozens more being
engineered in academic and government labs against everything from Ebola
virus to West Nile disease.
The surprising result: Annual growth for the vaccine industry will rise
to the mid-teens per year, up from an historic average of 10%, according
to a recent report commissioned by the Global Alliance for Vaccines &
Immunization (GAVI). "It's really a good time to be in the vaccine
business," says Dr. Thomas P. Monath, research chief at Acambis Inc. (ACAM
) in Cambridge, Mass., which is churning out smallpox vaccine for the
U.S. government.
Moreover, vaccines are becoming far more versatile. Traditional
immunizations prime the immune system to fight off parasites, bacteria,
or viruses such as flu. But increasingly, vaccines are tackling diseases
beyond the infection itself. Merck's HPV vaccine doesn't just prevent
infection from HPV--it also holds the hope of eliminating the cervical
cancer caused by the virus. Other experimental vaccines are aimed at
prodding the immune system to eat away malignant tumors or chew up the
brain tangles of Alzheimer's disease. "We are ready for a renaissance in
the whole vaccine area," says Stephen A. Johnston, a biochemist at the
University of Texas Southwestern Medical Center.
What explains the resurgence of vaccines? Credit a combination of smart
policy moves, advances in science, and a big change in the economics of
the business. Back in the 1980s, companies bailed out of vaccines
because prices--and profits--were low, and because they faced huge legal
threats from people harmed by vaccines. Congress largely solved the
liability issue with a 1986 bill setting up a program to compensate
victims. "That led to increased research, and we are seeing the fruits
of that now," says independent drug analyst Hemant K. Shah.
The ability to command premium prices helped, too. In the late 1980s,
Merck and SmithKline launched gene-spliced vaccines for hepatitis B. At
$30 to $40 per dose, they cost well above what is charged for common
childhood vaccines used to prevent measles, tetanus, or whooping cough.
That marked the start of "increased interest in vaccines as a business
as opposed to a public-health intervention," says Piers Whitehead,
vice-president of biotech company VaxGen Inc. (VXGN
) in Brisbane, Calif., and co-author of the recent GAVI report.
Now, vaccines are racking up profits once seen only with blockbuster
drugs. The best example is Wyeth Corp.'s (WYE
) Prevnar, a vaccine that helps protect children from the pneumococcal
bacteria that cause meningitis. Prevnar's price is a lofty $232 for a
four-dose course. Lehman Brothers Inc. analyst C. Anthony Butler
predicts that the vaccine, with estimated sales of $625 million this
year, could soon be a $1.5 billion product. "Wyeth's success has shown
other companies that there is a potential for vaccine blockbusters,"
says Dr. Stanley A. Plotkin, consultant to Aventis Pasteur Ltd., one of
the four big vaccine makers, and professor emeritus at the University of
Pennsylvania.
Improved economics have prompted vaccine makers to boost R&D spending.
The four industry leaders--Merck, GlaxoSmithKline, Aventis Pasteur (AVE
), and Wyeth--are estimated to spend more than $750 million a year on
vaccine R&D--as much as a fivefold jump at some companies since '92.
Scientific advances also are helping prompt renewed interest. One hot
idea is to develop a basic vaccine that could be customized for a range
of diseases. Acambis, for example, is using its yellow-fever vaccine as
a way to deliver bits of other viruses--such as West Nile--to the immune
system. Other drugmakers are creating vaccines made of DNA that could be
spliced quickly with new genes when novel diseases or bioterror agents
suddenly emerge (box).
None of this will make vaccines as glamorous--or as profitable--as
drugs. For one thing, getting a vaccine approved can take longer than it
does for drugs. The Food & Drug Administration wants proof that no
serious side effects will appear even when the product is given to tens
of millions of people. But that's tough, as evidenced by the current
controversy over whether mercury in past children's vaccines could have
caused autism.
Finally, scientists caution that they're still a long way from creating
vaccines for viruses crafty enough to hide from the immune system, such
as HIV. But with a host of important new vaccines now in companies'
pipelines, this former poor stepsister is getting ready for the ball.
By John Carey in Washington, with Kerry Capell in
London
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